Elections and the Economy

Executive Summary

Turkey experienced strong economic growth in the early 2000s, driven by post-crisis structural reforms, macroeconomic stability, and the institutional anchor provided by the European Union accession process. This growth was accompanied by rising productivity, poverty reduction, and structural transformation, particularly through the shift of labor from agriculture toward industry and services. However, this growth model relied heavily on “low-hanging fruits” resulting from structural change rather than innovation-based development, while persistent challenges remained in areas such as education quality, savings rates, technological capacity, and export sophistication.

After 2012, economic growth slowed significantly due to stagnating productivity and a weakening institutional framework. Declining rule of law, reduced independence of economic institutions, increasing political polarization, and declining investor confidence have negatively affected Turkey’s growth prospects.

Turkey now faces the need for comprehensive structural reforms to achieve sustainable higher growth rates. However, political uncertainty and difficulties in forming stable coalitions make the implementation of these reforms challenging. Without substantial improvements, the economy risks becoming trapped in a moderate growth trajectory of approximately 3–4 percent.